According to a representative body of cooperative agriculture banks federation, increase in income of farmers due to FDI in retail would also lead to improvement in recovery of loans from them
Batting for FDI in multi-brand retail, a representative body of Cooperative Agriculture Banks Federation has said it (the decision) will help farmers to fetch better returns and also lead to improvement in recovery of loans from farmers, reports PTI.
"Definitely, FDI in retail will result in more income for farmers because big international retailers will be procuring agricultural commodities directly from farmers and pay them more prices to them while eliminating the middlemen," KK Ravindran, managing director of National Cooperative Agricultural & Rural Development Banks' Federation Ltd (NCARDBF) told reporters.
NCARDBF also said that increase in income of farmers would also lead to improvement in recovery of loans from farmers.
"As farmers will be benefited (because of FDI in retail), we will also be benefited. They (farmers) will return our money and there will be improvement in recovery and thereafter more funds could be deployed in agriculture," NCARDBF Chairman K Sivadasan Nair said.
State Cooperative Agriculture and Rural Development banks are functional in 19 states except Maharashtra, Assam, Orissa and Tripura. The total outstanding finance including investment credit to agriculture sector by banks is pegged at Rs15,800 crore with non-performing asset (NPA) level of 20%.
The loan recovery of these banks in the country was 45.6% last year, though Ravindran expected that the loan recovery would improve in current fiscal year than that of last financial year.
During the conference, the apex body of cooperative lending structure sought from the Centre to turn the cooperative agriculture and rural development banks to fully fledged banks like commercial banks operating in the country.
"We want that Reserve Bank of India (RBI) should allow us to function like a commercial bank and then we can accept deposit like banks which can be used for other banking services other than financing to farm sector," Ravindran said.
"There are some cooperative banks operating like Punjab, Kerala, Rajasthan, West Bengal which are running efficiently and they can be converted into a fully fledged banks," said Ravindran.
With overdue in farm loans for investment purpose rising in most of the states, NCARDBF said it was decided to examine the feasibility of giving relief to farmers (who defaulted due to genuine reasons) by rescheduling their outstanding dues to enable them to pay in easy instalments.
Banks would be allowed to take legal recourse in respect of wilful defaulters who avoided repayment in spite of having capacity of pay as part of measures to strengthen the long term cooperative credit structure, it said.
The Centre will be urged to reduce interest rate on long-term loans which is currently 10% for farmers through refinance by NABARD or provide interest subvention which is given on crop loans, the body said.
It was also suggested to consider the feasibility of issuing revolving guarantee by state governments instead of yearly one and to examine the possibility of waiving the fee for guarantee given for state cooperative agriculture and rural development banks, it added.